A couple months ago I was working with an amazing couple looking to buy a new home. For the sake of this blog I will call them Joe and Nadine. They owned a great condo town home and wanted to get into investing in properties. They had paid off the majority of the mortgage on their town home and decided they wanted to rent it out and buy a new freehold property. At our first meeting they new exactly what they were looking for - a detached or semi-detached home in the west end of Toronto; that had a finished basement, large enough back yard where they could entertain and their dog could play, and it must have parking. They weren’t afraid of a fixer upper as long as it had potential and their budget was around $700,000.
Our first day out we looked at four different homes. The first one we walked into was perfect, exactly what they were looking for and in their preferred neighbourhood. It was a gorgeous two storey, 3 bedroom home that had been renovated in the last 10 years. The renovations were good but it still allowed them to go in and add their own touches without breaking the bank. The house had an offer date four days later and after looking at a few different homes and deciding the first one is the charm we made an offer. The house was priced slightly under market value and after reviewing the home inspection and discussing it with their mortgage broker, Joe and Nadine decided to make their offer an aggressive one, over asking and firm without any conditions. At the offer presentation we were competing with 9 other offers, each participant came in aggressively as well, cheque in hand. I thought for sure we had it, it was a fantastic offer and Joe and Nadine were familiar with the comparable sale in the neighbourhood but really wanted this home. Unfortunately we weren’t high enough and did not get it, we weren’t even close. Another buyer was willing to go extremely high and we just couldn’t compete
Feeling a little bruised, we continued looking. A week later a nice house came up on the market. I guess nice is an understatement, it was a fantastic home. Completely gutted and renovated this house had everything Joe and Nadine wanted. The only problem was, it was priced way too high, higher than any semi-detached home had ever sold for in that particular west end neighbourhood. We decided it would still be fun to have a look at and of course, the minute we walked through the door, they fell in love. The only thing was, we just could not make the numbers work. We decided to keep looking but to keep an eye on the house and see if the seller had a change of heart and reduced the price. They knew there was a risk in possibly losing the home but again we just could not make the numbers work.
Fast forward four weeks later and we had looked at numerous homes now in the west and east ends of Toronto, yet the overpriced home was still on their minds and nothing compared. We decided to have a second look at it and like the first time they were still in love with the home and wanted to do an offer. Over coffee we discussed the best approach to the offer, they were not willing to go up to the asking price, not even close, but they did have the advantage of a quick closing and since the house was vacant we thought that might be appealing to the seller. We put an offer together for 92% of the asking price, with a closing just three weeks away. We also included a condition for a home inspection and financing to be on the safe side. The offer was irrevocable for 24 hours for the seller to review and it was a long night of waiting for my buyers. The next morning I receive an email sign-back from the listing agent, the Seller had sign-back $4000.00 over our offer price and kept everything the same. Joe and Nadine were in shock, the sign back was still within their budget and they got all the conditions they wanted. The home inspection went off perfectly and five days later Joe and Nadine had bought the home of their dreams.
A lot of times sellers will over price homes to test the market but the longer those homes stay on the market, the less likely they will sell for asking price or over. The problem is they scare off potential serious buyers and the possibility of a bidding war. My philosophy is that if you are in love with a home and you are not competing for it, you give them an offer within reason. The absolute worst that can happen is they say no. Sometimes it is worth going after your dream home even if it isn’t within your budget. Congratulations Joe and Nadine!
- All names, prices and locations have been changed for this blog.